Customers inquire and try out a Model Y car displayed at a Tesla store in Shanghai. Photo: Yang Hui/GT

Tesla reported record deliveries in 2020 of about half a million cars, aided by the production ramp-up at its Shanghai Gigafactory which could make more than 5,000 Model-3 cars a week, according to the company's financial report released on Wednesday.

For the full year, the company produced 509,737 cars and delivered 499,550 units, which the company said is in line with its guidance. 

Production and growing demand in China significantly contributed to Tesla's recent performance. Throughout 2020, the Silicon Valley-based company increased its Model-3s at its Shanghai factory to more than 5,000 cars a week, while it has begun delivering China-made Model-Y sport utility vehicles this month.

Tesla's record delivery benefited from rising electric-vehicle demand in China, but also faces fiercer competition from a fleet of local brands including BYD, Xpeng Motors and NIO.

Tesla has been offering discounting to gain an edge over competition with traditional combustion vehicles and local brands. 

Following several price cuts on its Model-3 vehicles, the Global Times noted on the Tesla China website that the price of its Model-S Plaid was cut by 174,900 yuan ($26,980) to 999,990 yuan.

Tesla is also stepping up investment in the Chinese market as the pandemic still rages in many countries. It is planning to invest 42 million yuan in establishing a factory that manufactures and researches superchargers. The factory will begin production in the first quarter of 2021 and plans to produce 10,000 superchargers annually within its first few years of operation.